Maruti Suzuki's ₹35,000 Crore Gujarat Plant to Add 1 Million Units

Maruti Suzuki Announces Major Expansion with New Gujarat Plant

Maruti Suzuki India Ltd., the country's largest passenger car manufacturer, has announced a significant investment of ₹35,000 crore to establish a new manufacturing facility in Gujarat. The upcoming plant, located at Khoraj near Sanand in the Ahmedabad district, is a cornerstone of the company's strategy to meet escalating domestic and international demand. This move is expected to solidify Gujarat's position as a leading automotive manufacturing hub in India.

Details of the Investment

The new facility will be developed on a 1,750-acre plot of land provided by the Gujarat Industrial Development Corporation (GIDC). The project aims to add an annual production capacity of one million (10 lakh) vehicles. The company's board has already approved an initial investment of ₹4,960 crore for the acquisition of this land. Production at the new plant is slated to commence in the financial year 2028-2029. This substantial investment is projected to create direct employment opportunities for approximately 12,000 individuals.

Official Handover and Government Support

The formal announcement was marked by a ceremony in Gandhinagar where Maruti Suzuki's Managing Director and CEO, Hisashi Takeuchi, handed over the investment letter to Gujarat Chief Minister Bhupendra Patel. The event was also attended by key state officials and company executives. Chief Minister Patel highlighted the project's potential to catalyze the growth of ancillary units and Micro, Small, and Medium Enterprises (MSMEs), thereby creating a more integrated and robust auto manufacturing ecosystem in the state. He also emphasized that Maruti Suzuki's continued investment reflects global confidence in Gujarat's industry-friendly policies and world-class infrastructure.

Strategic Importance for Maruti Suzuki

This new plant is a critical component of Maruti Suzuki's long-term vision to scale its total manufacturing capacity to four million units per annum. The expansion is driven by the consistent rise in demand for passenger vehicles in India, which is now the world's third-largest car market. The company also aims to strengthen its export capabilities from this new base. In the calendar year 2025, Maruti Suzuki achieved its highest-ever annual production, manufacturing over 22.55 lakh units. This was the second consecutive year the company surpassed the two-million-unit production milestone.

Project Snapshot: New Gujarat Plant

Existing Operations and Future Outlook

The new facility at Khoraj will complement Maruti Suzuki's existing plant at Hansalpur, Gujarat. The Hansalpur plant currently has a production capacity of 7.5 lakh cars per year, with plans underway to increase this to 10 lakh units by the 2026-27 financial year. The combined capacity from both Gujarat plants will significantly contribute to the company's overall production targets. This expansion strengthens Maruti Suzuki's competitive advantage through scale, capacity readiness, and an expanded service network, as noted by analysts at ICICI Securities.

Market Reaction and Stock Performance

Following the announcement, the stock of Maruti Suzuki reacted positively. On January 19, the shares closed 2% higher at ₹16,182, emerging as the top gainer on the Nifty Auto index. Despite this gain, the stock has seen a 3.1% decline so far in 2026, compared to a 2% fall in the Nifty Auto index. From a valuation perspective, the stock trades at a price-to-earnings (P/E) ratio of 33.74. The 14-day Relative Strength Index (RSI) stands at 35.7, suggesting the stock is approaching, but not yet in, the oversold territory.

Economic Impact on the Region

The investment is poised to deliver a substantial economic boost to Gujarat. Beyond the 12,000 direct jobs, the project is expected to create a ripple effect, generating significant indirect employment in ancillary industries, logistics, and services. The development of a large-scale manufacturing cluster will attract further investment, enhance local infrastructure, and contribute to the state's industrial output. This move reinforces the strong industrial partnership between India and Japan, fostering continued economic collaboration.

Conclusion

Maruti Suzuki's ₹35,000 crore investment in a new Gujarat plant is a strategic move to secure its market leadership and prepare for future growth. By adding one million units to its annual capacity, the company is positioning itself to effectively meet the demands of a growing market. As the project moves towards its operational launch in FY29, it is set to create thousands of jobs and significantly enhance India's automotive manufacturing capabilities.